In-store credit and hire-purchase

There are many different forms of in-store finance, each with ‘buy now and pay later’ offers. They’re often promoted in a way to attract you into taking them out but make sure you know what you’re getting into before you do.

What are store cards?

Store cards are a form of credit card but you can only use the card to make purchases within that particular store, or group of stores.

You’re likely to be offered a card at the checkout, when you come to pay for the goods.

Also, the interest rates on store cards are often much higher than normal credit cards.

This means that unless you pay off the balance in full each month it can take a long time, and cost a lot more, to repay the debt - particularly if you continue to use the card to make new purchases.

Before you sign up, make sure you can afford the repayments.

If you sign up but change your mind, there’s a 14-day cooling-off period when you can cancel your agreement. This applies to all types of credit agreement, not just store cards

Some store cards might actually be ‘charge cards’ - which means that you have to pay off the full balance at the end of the month.

If you don’t, you’ll be hit with extra charges. Make sure you understand what you’re signing up for.

What are store-linked credit cards?

These are credit cards which carry the branding of the store you got the card from and that retailer might give you benefits and discounts when you use your card, but they can be used outside of the store as well.

These might have longer interest-free periods than store cards, and similar rates of interest to unbranded credit cards, but you still need to think how you’re going to pay them off - make sure you do so before any introductory period ends.

Catalogue credit and shopping accounts

Many catalogue brands, online shops and some high street shops offer buy now, pay later credit.

You get finance on an individual purchase and pay it off over time.

A particular type of this, often offered by catalogue brands, is a ‘shopping account’.

This is a bit like a credit card, but without the card - you’re given a credit limit, and you can keep spending up to this maximum amount, provided that you make at least the minimum repayment each month.

In other cases, you might be offered what is called ‘instalment credit’.

This is basically a loan to finance the purchase - you own the goods from the start, but you pay for them in fixed instalments, either monthly or weekly, over a fixed period.